GST and export sales for Aussie SMEs – Stay compliant

Australian SMEs are some of the most innovative and creative in the world. We have access to incredible raw materials and advanced technologies that enable Aussie SMEs to punch above their weight. For Australian small and medium-sized enterprises, expanding into international markets unlocks significant growth opportunities. However, many business owners are unsure how Goods and Services Tax (GST) applies when selling products or services to overseas customers.

The good news? In most cases, GST does not apply to exports. But while this simplifies pricing, it does not remove your compliance obligations. Understanding how GST works in an international context is essential for maintaining accurate accounting records and staying compliant with Australian tax law.

GST is a 10% tax applied to most goods and services sold domestically. However, exports of goods and many services are generally GST-free. This means that if your SME sells products to customers outside Australia, you typically:

• Do not charge GST on those sales
• Still report the sale in your Business Activity Statement (BAS)
• Can claim GST credits on business expenses related to those exports

This GST-free treatment exists to ensure Australian businesses remain competitive in global markets.

While exports are generally GST-free, specific conditions must be met. For goods:

• The products must be exported from Australia within 60 days of invoicing or payment
• The supplier must retain evidence of export (e.g. shipping documents)

For services:

• The recipient must be outside Australia, and
• The service must be used or consumed outside Australia

If these criteria are not met, the sale may be treated as a taxable supply, even if the customer is overseas.

Even though you don’t charge GST on exports, they still play a role in your accounting and reporting.

GST turnover still includes export sales. Export income is included when calculating your GST turnover. This means SMEs must still register for GST if total revenue (including exports) exceeds $75,000.

Input tax credits still apply. You can claim GST credits for expenses related to producing exported goods or services. This includes:

• Raw materials
• Marketing costs
• Professional services

This ensures you are not out of pocket for GST paid on business inputs, even though your sales are GST-free. GST-free exports must still be reported in your BAS under GST-free sales. While no GST is payable, accurate reporting is required to avoid discrepancies with the ATO.

When you sell products or services internationally, it does add additional compliance responsibilities. Here are the key areas SMEs must stay on top of:

Accurate record keeping. You must maintain documentation proving that sales qualify as exports. This may include:

• Export invoices
• Shipping or freight documents
• Proof of overseas delivery

For services, GST treatment depends on where the service is actually used, not just on the customer’s location. If a service is delivered or consumed in Australia, GST may still apply.

If your business sells to Australian and international customers, you must clearly distinguish between taxable (GST applies) and GST-free (exports). Incorrect classification can lead to underpayment or overpayment of GST.

Even if most of your revenue comes from exports, you must still:

• Lodge BAS statements
• Report GST correctly
• Comply with ATO record-keeping standards

SMEs can make avoidable errors when dealing with GST and exports. These include:

• Assuming all overseas sales are automatically GST-free
• Failing to export goods within the required timeframe
• Not retaining adequate documentation
• Misreporting GST-free sales on BAS

Each of these can trigger ATO scrutiny or penalties.

Export sales still impact your GST registration, accounting processes, and compliance obligations, and it is important to understand and comply with the rules governing exports. If in doubt, consult a qualified business accountant to ensure you remain compliant and maximise the international opportunities.